It Looks Like The Big Three Are Back

There's no denying that Detroit automakers have had a rough couple of years. It was about this time in 2008 that gas prices began climbing toward $4 a gallon, which brought about a dramatic change in vehicle demand and explains why there are so many hybrids and compacts in the pipeline these days. A couple of months later, the looming financial crisis hit the auto sector head-on, the Big Three made bailout bids to Congress, two entered bankruptcy court, and, well, you know the rest.

Today, Detroit seems to have turned a corner. Ford -- which never succumbed to the lure of bailout dough -- has been on a roll for months, and now, General Motors and even Chrysler look to be catching up. Just look at GM's production schedule: the automaker has opted to skip its traditional two-week shutdown at nine of its 11 assembly plants, indicating that demand for GM vehicles is on the up. The company is also planning to launch an IPO during the fourth quarter of this year; true, the timing is partly a result of the recovering U.S. economy, but it also speaks to GM's readiness to get back on its own feet. Chrysler may not be prepared to crawl out of the nest just yet, but it's finally bringing new vehicles to showrooms, having recently launched a muddled but ultimately fixable campaign for the 2011 Jeep Grand Cherokee.

And in some of the best news Detroit has seen in months, J.D. Power's Initial Quality Survey revealed yesterday that on average, domestic auto brands now have fewer problems than their foreign rivals. The margin was small -- U.S. models saw 108 problems per 100 vehicles, while foreign vehicles scored 109 -- but it's the first time Detroit has ever come out on top in initial quality. That's some cause for optimism.

But wait, there's more: according to a report in Detroit News, exhibitor space for the 2011 Detroit Auto Show is completely sold out. Of course, NAIAS isn't limited to U.S. automakers, and we're sure a number of foreign manufacturers will return after their hiatus in 2009, but to anyone who remembers last year's dismal auto show attendance -- here and elsewhere -- the news is pretty impressive.

We're trying not to be too Pollyanna about all this. We understand that Detroit's recovery is in its very early stages, and it could go off the rails at any moment. But it's also clear that the Big Three are on a bit of a roll, and they're picking up speed, and since it's Friday, we're going to throw caution to the wind and celebrate just a bit on their behalf.

Richard - while it's cool to be mentioned in a piece talking about the emerging/TBD comeback of the industry, it should be noted NAIAS, to clarify, didn't really have "dismal" attendance in 2010 (I might have misunderstood, but assuming you meant "last year" as 2010/the last show) Actually, we had more than 60 countries represented by about 5,000 journalists. Public days had the show at 750,000 people, which was up 100,000 from 09. To your point though, the floor is full and that's always a good sign 7 months ahead of the show. Best and here's to hoping some good times continue to (cautiously) roll.
Sam

Richard
Posted: 6/18/2010 2:06pm PDT

Thanks for the response, Sam. Yes, I was referring to NAIAS 2010 when I said "last year". And I wasn't picking on Detroit when I mentioned flagging numbers: auto shows around the world saw a significant reduction in attendance from OEMs in 2009 and early 2010.
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That said, our staff were there in January, and there's no denying that while NAIAS' public days may have been huge, the press days were a little slim. In fact, we even commented on it: http://ht.ly/20t4v. There's no crime in that -- and in fact, it makes this year's lineup look even more striking by comparison.

Rich
Posted: 6/19/2010 3:49pm PDT

GM and Ford are doing much better but to say Chrysler is out of the woods is very premature. Only 1 new model in it's entire lineup (and a dated suv guzzler at that). But the entire rest of it's lineup is dated and in trouble, save for the Ram (another guzzler). So, the fat lady is still ready to sing fir Chrysler. GM and Ford have been at death's door before--they and the UAW need to break old patterns of making good business decision for only short terms.